Bombardier is a Canadian multinational and one of the world’s leading aircraft manufacturers.
Could you update us on the C Series highlights and the significance of the program to the region?
The performance and reliability of the aircraft have been outstanding so far, with more than 1.5 million passengers flown on more than 100 routes and airBaltic operating the aircraft up to 17 hours per day. Following this successful entry-into-service in Europe, the C Series will make its Asian debut later in 2017 with Korean Air. In parallel, our facilities in Québec are bustling with activity. More than 2,000 Bombardier employees are currently focusing on ramping up C Series production.
Where else is Bombardier currently focusing its resources?
With the entry-into-service of the C Series aircraft behind us, we refocused our resources on the development of the Global 7000: Bombardier’s all new, ultra-long range business jet. This aircraft will be the best business jet in the world, with four distinct living spaces and a wing designed to optimize performance while ensuring a perfectly smooth ride, even at a speed of Mach 0.925. As of September 2017, we had three flight testing vehicles in flight testing, and two more getting ready to join the program. The aircraft had already reached its maximum altitude and a speed of Mach 0.995, showing a high level of maturity.
The Global 7000 is on track to enter into service in the second half of 2018 as planned, and the first customer aircraft are progressing smoothly through production at our facility in Toronto. Meanwhile, we are also expanding our Global Completion Centre in Montréal, where the design, manufacturing and installation of passenger interiors of the new aircraft will take place, creating nearly 1,000 good jobs for designers, engineers, carpenters, upholsterers and painters.
The Québec government has shown a great deal of financial support for Bombardier’s C Series and the industry at large. Could you elaborate on the relationship and importance of the government in driving the industry?
The aerospace industry is recognized for creating high quality jobs, generating steady R&D investments and stimulating exports. This results in significant economic benefits for both governments and society. In fact, since Bombardier entered the aerospace sector in 1986, the company and its employees have been the source of almost $17 billion in government revenue through direct program repayments and taxes paid. This is why a growing number of countries compete to grow their local aerospace industry and attract foreign aerospace investments.
There is often a stronger business case for OEMs in receipt of government investment to offshore. How should the balance be managed so that the region’s ecosystem sees maximum return?
While Canada represents less than 10% of Bombardier’s revenues, we have a strong footprint here with over 21,000 employees, including more than 15,000 in Québec, and several production and engineering sites. This reflects our 75-year history and our strong commitment to this country. It also enables us to leverage Canada’s competitive strengths, such as strong R&D capabilities, world-class engineering talent and high-value manufacturing.
Complementing our footprint in Canada with facilities abroad enables us to harness the comparative advantages they can offer, enhancing our competitiveness. It can also help us gain greater market access, creating new opportunities for growth at home and across our global network of sites. It is not a zero sum game – quite to the contrary – developing global value chains is critical to make our Canadian operations more efficient and to keep Bombardier among the world’s top three aerospace players.
In today’s research and development environment, a great deal of innovation is arising from universities and SMEs. How open is Bombardier to collaboration?
Bombardier is, by far, the top R&D investor in Canada and invested more than $6 billion in R&D in the past 10 years. We highly value our collaborations with universities as they help us to innovate and, ultimately, to create the best products. In our Québec aerospace operations, we are actively participating in close to 20 collaborative projects involving universities, SMEs and other industry players. These types of projects are crucial to help adapt R&D concepts into commercially viable solutions and to improve our global competitiveness.
Could you outline Bombardier’s main objectives over the next few years and its longer-term vision?
When I joined Bombardier in 2015, I launched a five-year turnaround plan that aims to transform this company into a $25-billion business with a 7-8% EBIT margin by 2020. To reach these objectives, we first de-risked the company by securing the right level of liquidity to execute our plan. We then turned our focus to building our earnings power and cash flow. To get there, we are driving an operational transformation across Bombardier, tackling all aspects of cost (direct, indirect, working capital, and so on). This will enable us to translate the significant investments we made in our new commercial and business aircraft into higher margins and to deleverage the company’s balance sheet.
On the revenue front, two of the largest growth drivers will be the C Series and the Global 7000 aircraft. Our Commercial Aircraft team is currently ramping up production to meet our target of 90 to120 C Series aircraft deliveries per year by 2020 and at Business Aircraft, all hands are on deck to bring the Global 7000 aircraft into service in the second half of 2018, as planned. Additional growth will come from Bombardier Transportation, our $8-billion rail transportation business, which has a healthy order backlog of more than $32 billion, and from an overall increase in services to our large installed base.
Finally, our long-term vision is simple: we want to be the global leader in each of our market segments; to grow profitably and sustainably; to generate tremendous value for our customers and shareholders; and to continue to create high-value jobs.